You can have a great credit score, stable income, and all your paperwork in order and still have your home loan held up because of something about the property. Banks are not just lending against your repayment ability. They are lending against an asset they may have to recover someday, so they look at that asset quite carefully before anything gets disbursed.

Five things come up almost every time.

Legal Title: Does the Seller Actually Have the Right to Sell?

Before the bank even thinks about approving a home loan for you, it sends the property documents to a panel advocate for a legal opinion. The advocate digs through the title chain usually going back 13 to 30 years to check whether ownership has passed cleanly between all previous sellers and buyers.

What disqualifies a property at this stage? Forged sale deeds, unregistered agreements, disputed inheritances, properties under court litigation, or missing links in the ownership chain. If the title is not clean, the bank will not fund it, no matter how financially sound you are.

Technical Valuation: What Does the Bank Think the Property Is Worth?

Banks do not accept the seller’s asking price at face value. They appoint a technical valuer who physically visits the property and arrives at an independent market value. Your home loan amount is typically capped at 75 to 90 percent of this valuation, not the actual transaction price.

This matters more than most buyers realize. If you agree to buy a flat for ₹80 lakh but the bank values it at ₹70 lakh, your loan eligibility is calculated on ₹70 lakh. The gap is yours to cover.

Approved Plan and RERA Registration

Banks check whether the building was constructed as per the plan approved by the local municipal authority. Construction beyond sanctioned limits, extra floors, rooms built without permission, encroachments on common areas makes the property technically illegal, and banks will not fund it.

For under-construction properties, RERA registration has become a standard requirement with most lenders. Builders who are not registered with the state RERA authority often find that buyers simply cannot get bank financing for their projects, which has quietly become one of the better consumer protections in the market.

Encumbrance: Is There an Existing Loan on the Property?

An encumbrance certificate tells you whether the property has any pending loans, mortgages, or legal dues attached to it. Banks pull this from the sub-registrar’s office to confirm the seller is not passing on hidden liabilities.

When you secure a home loan against a property, the bank takes a charge on it. They need to know that charge will be first in line not second behind some old debt the previous owner forgot to mention. If encumbrances exist, they need to be cleared and documented before the bank proceeds.

Occupancy Certificate and Age of the Property

For completed properties, banks look for an Occupancy Certificate issued by the local authority. This certificate confirms the building was built to approved plans and is fit for habitation. Buying a flat in a building that does not have this certificate is risky and banks know it.

Age is another factor. Many lenders will not finance properties that are more than 25 to 30 years old without a structural stability report, and some refuse entirely for very old properties. The logic is straightforward: the loan tenure can stretch to 20 years, and they need the asset to last at least that long.

Why Homebuyers Trust Mr. Loanwala for Their Home Loan Journey

At Mr. Loanwala we tell clients these things upfront before they sign any token amount cheque. Knowing how lenders assess a property helps you choose the right one. Our team works with multiple banking and NBFC partners, runs a basic property eligibility check alongside your profile, and flags potential issues early. No surprises at the final stage.